WhatsApp is facing pressure in India to let authorities trace and read the encrypted messages of its more than 200 million Indian users in a new attempt at constraining global tech giants.
India’s telecommunications regulator has asked for feedback on new rules that—in the name of national security—could force “over the top” services such as WhatsApp, which use mobile operators’ infrastructure, to allow the government access to users’ messages.
At the same time India’s Information Technology Ministry has proposed new intermediary guidelines that would force WhatsApp and others to trace messages and remove objectionable content within 24 hours.
WhatsApp—which has more users in India than in any other country—has “pushed back on government attempts to ban or weaken end-to-end encryption and will continue to do so,” said a person familiar with the company’s thinking.
.. Technology companies argue that they are obligated to protect their customers’ privacy and that demands from investigators would be impossible to satisfy. They say the protection of communication platforms is key for freedom of speech and has helped the global internet to flourish by enabling commerce and communications.
.. “It’s entirely aimed at WhatsApp,” Neha Dharia, director of strategy at London-based research and consulting firm DMMI, said of the government’s moves. “They are the largest messaging service in the country, and growing.”
WhatsApp, which Facebook acquired in 2014 for $22 billion, has been increasing its efforts to produce revenue. India is where the company introduced its first mobile-payments feature, which it hopes to roll out beyond the test phase.
Legions of Indians have flocked to WhatsApp’s service because it allows easy smartphone messaging without a complicated sign-up process. Its popularity has put it squarely in the sights of regulators and critics who say it is being used to spread rumors that can spark violence. More than 20 people were killed last year on the back of rumors spread through WhatsApp. In response, the company introduced restrictions on the number of groups to which messages can be forwarded.In Vietnam, a new cybersecurity law which went into effect this year requires internet companies to quickly comply with government demands to remove content it doesn’t like.
Organizations that enhance security with encryption find that it can come with a lot of trade-offs
.. Locking data away with encryption keeps it safe, but it comes with trade-offs. For one thing, companies can’t easily perform analysis or machine learning on encrypted data. So at a time when artificial intelligence and real-time data analysis is crucial for competitive advantage, executives must decide what to encrypt and for how long.
In addition, turning on encryption results in increased financial costs and performance impacts.
.. In the 1970s, though, mathematicians devised a more sophisticated method that was made easier with computers, called public key cryptography. This scheme allows people to exchange encrypted messages without sharing a secret key first.
.. encryption isn’t a silver bullet. Hackers can gain access to keys, making encryption worthless. And, before encrypted data can be searched or analyzed, it has to be decrypted first, requiring a company’s computers to work harder than usual.
When encryption is on by default, applications could be as much as 7% slower ..
How ugly was the breakup between Facebook Inc. FB -0.18% and the two founders of WhatsApp, its biggest acquisition? The creators of the popular messaging service are walking away leaving about $1.3 billion on the table.
The expensive exit caps a long-simmering dispute about how to wring more revenue out of WhatsApp, according to people familiar with the matter. Facebook has remained committed to its ad-based business model amid criticism, even as Facebook Chief Executive Mark Zuckerberg has had to defend the company before American and European lawmakers.
The WhatsApp duo of Jan Koum and Brian Acton had persistent disagreements in recent years with Mr. Zuckerberg and Chief Operating Officer Sheryl Sandberg, who grew impatient for a greater return on the company’s 2014 blockbuster $22 billion purchase of the messaging app, according to the people.
.. Many of the disputes with Facebook involved how to manage data privacy while also making money from WhatsApp’s large user base, including through the targeted ads that WhatsApp’s founders had long opposed.
.. Messrs. Acton and Koum are true believers on privacy issues and have shown disdain for the potential commercial applications of the service.
.. Mr. Zuckerberg and Ms. Sandberg have touted how an advertising-supported product makes it free for consumers and helps bridge the digital divide.
.. When Facebook bought WhatsApp, it never publicly addressed how the divergent philosophies would coexist. But Mr. Zuckerberg told stock analysts that he and Mr. Koum agreed that advertising wasn’t the right way to make money from messaging apps. Mr. Zuckerberg also said he promised the co-founders the autonomy to build their own products. The sale to Facebook made the app founders both multibillionaires.
.. Small cultural disagreements between the two staffs also popped up, involving issues such as noise around the office and the size of WhatsApp’s desks and bathrooms, that took on greater significance as the split between the parent company and its acquisition persisted.
.. During the height of the Cambridge Analytica controversy, in which the research firm was accused of misusing Facebook user data to aid the Trump campaign, Mr. Acton posted that he planned to delete his Facebook account.
.. David Marcus, an executive who ran Facebook’s other chat app, Messenger, confronted his former colleague. “That was low class,” Mr. Marcus said
.. When Mr. Acton departed Facebook, he forfeited about $900 million in potential stock awards
.. Mr. Koum is expected to officially depart in mid-August, in which case he would leave behind more than two million unvested shares worth about $400 million at Facebook’s current stock price. Both men would have received all their remaining shares had they stayed until this November, when their contracts end.
.. It is also the antithesis of what WhatsApp professed to stand for. Mr. Koum, a San Jose State University dropout, grew up in Soviet-era Ukraine, where the government could track communication, and talked frequently about his commitment to privacy.
.. Mr. Koum, 42, and Mr. Acton, 46, became friends while working as engineers at Yahoo Inc
.. WhatsApp, which launched in 2009, was designed to be simple and secure. Messages were immediately deleted from its servers once sent. It charged some users 99 cents annually after one free year and carried no ads.
.. Mr. Zuckerberg assured Messrs. Koum and Acton at the time that he wouldn’t place advertising in the messaging service, according to a person familiar with the matter. Messrs. Koum and Acton also negotiated an unusual clause in their contracts that said if Facebook insisted on making any “additional monetization initiatives” such as advertising in the app, it could give the executives “good reason” to leave and cause an acceleration of stock awards that hadn’t vested
.. Mr. Acton initiated the clause in his contract allowing for early vesting of his shares. But Facebook’s legal team threatened a fight, so Mr. Acton, already worth more than $3 billion, left it alone
.. said the WhatsApp founders are “pretty naive” for believing that Facebook wouldn’t ultimately find some way to make money from the deal, such as with advertising. “Facebook is a business, not a charity,”
.. At the time of the sale, WhatsApp was profitable with fee revenue, although it is unclear by how much.
.. Facebook told investors it would stop increasing the number of ads in Facebook’s news feed, resulting in slower advertising-revenue growth. This put pressure on Facebook’s other properties—including WhatsApp—to make money.
.. That August, WhatsApp announced it would start sharing phone numbers and other user data with Facebook, straying from its earlier promise to be built “around the goal of knowing as little about you as possible.”
.. Some of the employees were turned off by Facebook’s campus, a bustling collection of restaurants, ice cream shops and services built to mirror Disneyland.
.. After WhatsApp employees hung up posters over the walls instructing hallway passersby to “please keep noise to a minimum,” some Facebook employees mocked them with chants of “Welcome to WhatsApp—Shut up!”
.. “These little ticky-tacky things add up in a company that prides itself on egalitarianism,” said one Facebook employee.
.. Messrs. Koum and Acton proposed several ideas to bring in more revenue. One, known as “re-engagement messaging,” would let advertisers contact only users who had already been their customers.
.. None of the proposals were as lucrative as Facebook’s ad-based model. “Well, that doesn’t scale,” Ms. Sandberg told the WhatsApp executives of their proposals
.. Ms. Sandberg wanted the WhatsApp leadership to pursue advertising alongside other revenue models, another person familiar with her thinking said.
.. Ms. Sandberg, 48, and Mr. Zuckerberg, 34, frequently brought up their purchase of the photo-streaming app Instagram as a way to persuade Messrs. Koum and Acton to allow advertising into WhatsApp.
.. “It worked for Instagram,” Ms. Sandberg told the WhatsApp executives on at least one occasion
.. Mr. Zuckerberg wanted WhatsApp executives to add more “special features” to the app, whereas Messrs. Koum and Acton liked its original simplicity.
.. Mr. Zuckerberg and Ms. Sandberg also wanted Messrs. Koum and Acton to loosen their stance on encryption to allow more “business flexibility,”
.. Mr. Acton—described by one former WhatsApp employee as the “moral compass” of the team—decided to leave as the discussions to place ads in Status picked up.
The classification of cryptography as munitions was an interesting choice. The first amendment may protect domestic encryption capabilities as stated by the wikipedia article. From a legal standpoint, does encryption being classified as munitions also put it into second amendment territory? As information becomes weaponized, it’s an interesting thought. The first amendment is arguably more vulnerable these days, so I wonder if perhaps a second amendment argument could be made in support of domestic encryption. It certainly would help with marketing the argument to a certain segment of the population.